ITO WD 22(3)-1, NAVI MUMBAI v. DEVSHANKAR R. MOURYA, NAVI MUMBAI

ITA 2374/MUM/2013 | 2009-2010
Pronouncement Date: 28-09-2016 | Result: Dismissed

Appeal Details

RSA Number 237419914 RSA 2013
Assessee PAN ACRPM4775D
Bench Mumbai
Appeal Number ITA 2374/MUM/2013
Duration Of Justice 3 year(s) 6 month(s) 2 day(s)
Appellant ITO WD 22(3)-1, NAVI MUMBAI
Respondent DEVSHANKAR R. MOURYA, NAVI MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 28-09-2016
Appeal Filed By Department
Order Result Dismissed
Bench Allotted D
Tribunal Order Date 28-09-2016
Date Of Final Hearing 18-01-2016
Next Hearing Date 18-01-2016
Assessment Year 2009-2010
Appeal Filed On 26-03-2013
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL D IN THE INCOME TAX APPELLATE TRIBUNAL D IN THE INCOME TAX APPELLATE TRIBUNAL D IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH MUMBAI BENCH MUMBAI BENCH MUMBAI BENCH MUMBAI BEFORE BEFORE BEFORE BEFORE SHRI SHRI SHRI SHRI SANJAY GARG SANJAY GARG SANJAY GARG SANJAY GARG JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER AND AND AND AND SHRI SHRI SHRI SHRI ASHWANI TANEJA ASHWANI TANEJA ASHWANI TANEJA ASHWANI TANEJA ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ./I.T.A. NO.2374/MUM/2013 ( / / / / ASSESSMENT YEAR : 2009-10) DY.COMMISSIONER OF INCOME TAX -22(3) TOWER NO.6 3RD FLOOR VASHI RAILWAY STN.COMPLEX VASHI NAVI MUMBAI-400703 / VS. SHRI DEVSHANKAR MOURYA 120 SHIV CENTRE PLOT NO.72 SECTOR-17 VASHI NAVI MUMAI-400703 ( / // / APPELLANT) .. ( / RESPONDENT) ./ ./PAN/GIR NO. : ACRPM4775D / APPELLANT BY SHRI SHRI B S BIST /RESPONDENT BY NONE / DATE OF HEARING : 28.09.2016 /DATE OF PRONOUNCEMENT : 28.09.2016 / O R D E R / O R D E R / O R D E R / O R D E R PER SANJAY GARG JUDICIAL MEMBER : THE PRESENT APPEAL HAS BEEN PREFERRED BY THE REVEN UE AGAINST THE ORDER OF LD.CIT(A)-33 MUMBAI- DATED 28.1.2013 FOR THE ASSESSMENT YEAR ITA NO.2374/MUM/2013 2 2009-10. THE REVENUE IS AGGRIEVED AGAINST THE ACTI ON OF THE LD.CIT(A) IN DELETING THE ADDITION OF RS.3 51 39 888/- WHICH WAS MADE BY THE AO UNDER SECTION 41(1) OF THE INCOME TAX ACT 1961 ON ACCOUNT OF CESSATION OF LIABILITY. 2. FACTS OF THE CASE ARE THAT DURING THE ASSESSMENT PROCEEDINGS THE AO OBSERVED THAT THE SUNDRY CREDITORS FOR AN AMOUN T OF RS.3 51 39 388/- WERE OUTSTANDING. WHEN ASKED TO EXPLAIN THE ASSES SEE EXPLAINED THAT HE WAS ENGAGED IN THE BUSINESS OF FABRICATION ERECTIO N AND CONTRACT WORK FOR THE FACTORY ERECTION AND INSTALLATION. THAT THESE S UNDRY CREDITORS WERE IN RELATION TO THE PURCHASES MADE BY THE ASSESSEE. DUE TO THE SHORTAGE OF FUNDS HE COULD NOT MAKE THE PAYMENT TO THE SAID PA RTIES. ON BEING ASKED TO FILE CONFIRMATIONS THE ASSESSEE FILED CONFIRMAT ION OF ALMOST ALL THE SUNDRY CREDITORS. BUT THE AO FOUND THAT THE PAN OF ALL THE CREDITORS WERE NOT MENTIONED ON THE CONFIRMATION LETTERS. HE THE REFORE ASSUMED THAT THE ASSESSEE HAD MADE FALSE SIGNATURES ON THE CREDI TORS CONFIRMATION LETTERS. HE ALSO MADE AN OBSERVATION THAT IF THE SI GNATURES ON THE CREDITORS CONFIRMATION LETTERS WOULD FOUND FORGED ON THE LETT ER THEN PROSECUTION MAY BE LODGED AGAINST THE ASSESSEE. HE ON THIS ACCOUNT ASSUMED THAT THE CREDITORS WERE NOT GENUINE CREDITORS BUT THEY EXIST IN THE BOOKS OF ACCOUNT ONLY TO BOOK BOGUS EXPENSES. HE FURTHER FOUND THAT THE CREDITORS WERE OUTSTANDING FOR MANY YEARS. ACCORDINGLY ADDED SUND RY CREDITORS AMOUNTING TO RS.3 51 39 388/- IN THE TOTAL INCOME O F THE ASSESSEE UNDER SECTION 41(1) OF THE ACT. ITA NO.2374/MUM/2013 3 3. BEING AGGRIEVED BY THE ABOVE ORDER THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A). BEFORE THE LD. CIT(A ) THE ASSESSEE FURNISHED DETAILS OF ALL THE 113 SUNDRY CREDITORS AND CLAIMED THAT THE SAID CREDITORS HAD SUPPLIED HIM VARIOUS MATERIALS LIKE CEMENT H ARDWARE AND SPARES STEEL AND PIPES CONSUMABLES PURCHASE CEMENT SUPPL IERS VALVES FLANGE AND FITTINGS SUPPLIERS SAND AND BRICK SUPPLIERS F ABRICATION AND WELDING MATERIAL SUPPLIERS PAINTS SUPPLIERS VESSELS AND P UMP SUPPLIERS FUEL AND GAS SUPPLIERS ETC. HE FURTHER SUBMITTED THAT OUT O F SAID 113 CREDITORS SOME WERE REPUTED PARTIES LIKE M/S ACC LTD M/S AVE RY INDIA LTD M/S BOMBAY PAINTS LTD M/S CITY BANK GOLD INTERNATIONA L CARD M/S ORBIT CORPORATION ETC. WHOSE IDENTITY WAS NOT DOUBTFUL A ND THAT THEY WERE REGULARLY SUPPLYING THE MATERIALS TO THE ASSESSEE. IT WAS ALSO SUBMITTED THAT IN RESPECT OF CERTAIN PARTIES LEGAL PROCEEDIN GS WERE ALSO GOING ON. FURTHER IN SUBSEQUENT YEARS PAYMENTS TO CERTAIN P ARTIES HAD ALSO BEEN MADE. THAT PURCHASES MADE FROM THE PARTIES WERE DE BITED TO THE PROFIT AND LOSS ACCOUNT AND HAVE NEVER BEEN DOUBTED BY THE AO. THE ASSESSEE COULD NOT PAY TO THESE CREDITORS BECAUSE O F CRUNCH /PAUCITY OF FUNDS BUT THE LIABILITY OF THE ASSESSEE STILL EXIST S. THE LD.CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE ASKED T HE ASSESSEE TO FURNISH PAN/SALES TAX NUMBERS OF ALL THE CREDITORS AND ALSO TO FURNISH PARTICULARS OF PAYMENTS MADE TO THEM IN THE RESPECTIVE YEARS THROU GH BANKING CHANNELS. THE ASSESSEE ACCORDINGLY FURNISHED THE CONFIRMATION FROM 29 PARTIES AND FURTHER SUPPORTING DOCUMENTS LIKE BILLS AND VOUCHER S IN RESPECT OF 57 ITA NO.2374/MUM/2013 4 PARTIES. THE ASSESSEE ALSO SUBMITTED THE DETAILS O F PAYMENTS MADE IN THE SUBSEQUENT YEARS IN RESPECT OF 48 PARTIES. THE LD . CIT(A) CALLED FOR A REMAND REPORT IN THIS RESPECT FROM THE AO. THE AO SUBMITTED HIS REMAND REPORT AGAINST WHICH THE ASSESSEE ALSO FILED HIS RE PLY. AFTER CONSIDERING ALL THE DETAILS OF THE CREDITORS AND EVIDENCES IN RESPE CT OF MATERIAL SUPPLIED LIKE PAN/CST NO./TAN NO./VAT TIN NO AND IN CASE OF SOME PARTIES; AGENCY IDENTITY NO. AND SERVICE TAX NO. THE DETAI LS OF BILLS AND VOUCHERS ETC. THE LD.CIT(A) DIVIDED THE LIST OF CREDITORS I NTO TWO PARTS. IN THE FIRST PART HE PLACED CREDITORS WHOSE DETAILS WERE GIVEN AND ALSO CONFIRMATION WERE FILED AND IT WAS HELD THAT THERE WERE NO REAS ONS TO DISBELIEVE THE OUTSTANDING LIABILITY OF THE ASSESSEE AGAINST THESE CREDITOR. HE OBSERVED THAT THE AO HAD NOT CONDUCTED NECESSARY INQUIRY IN THIS RESPECT AND HELD THAT CREDITORS AS BOGUS MERELY ON ASSUMPTION WHICH WAS NOT JUSTIFIED. 4. IN THE SECOND CATEGORY HE PLACED CREDITORS WHER E NO CONFIRMATIONS WERE FILED BY THE ASSESSEE DURING THE APPELLATE PRO CEEDINGS BEFORE THE LD. CIT(A) HOWEVER CONFIRMATIONS WERE FILED FROM THOS E CREDITORS DURING THE ASSESSMENT PROCEEDINGS. THE LD. CIT(A) OBSERVED TH AT THE AO HAD DISBELIEVED THE SAID CREDITORS ONLY ON ASSUMPTION. HE DID NOT MAKE NECESSARY INQUIRY EVEN DURING THE REMAND PROCEEDING S. THE AO DID NOT CHOOSE TO ASCERTAIN IF THE PAYMENT SHOWN AS MADE BY THE CHEQUES TO ALL THESE PARTIES WERE GENUINE OR OTHERWISE. HE NOTED FROM THE REMAND REPORT THAT THE AO SIMPLY COMMENTED IN THE REMAND R EPORT THAT THE CONFIRMATION FILED BY THE ASSESSEE WERE MADE DURING THE COURSE OF SCRUTINY ITA NO.2374/MUM/2013 5 PROCEEDINGS ALSO AND HENCE VERIFICATION IN THIS REG ARD WAS NOT NECESSARY. THE LD. CIT(A) OBSERVED WHEN THE ASSESSEE HAD FILED THE NECESSARY DETAILS LIKE PAN TAN VAT CST NOS. INCLUDING THE IDENTITY OF THE PARTIES WAS ESTABLISHED; EVEN THE ASSESSEE HAD FURNISHED THE BI LLS AND VOUCHERS THEN IN THE ABSENCE OF ANY INQUIRY MADE BY THE AO IT C ANNOT BE HELD THAT THE SAME WERE BOGUS CREDITORS. EVEN THE ASSESSEE HAD MA DE PAYMENT THROUGH BANKING CHANNEL WHICH COULD HAVE BEEN ASCERTAINED B Y THE AO. HE FURTHER OBSERVED THAT OUT OF TOTAL 113 CREDITORS THE ASSE SSEE FILED CONFIRMATION LIST ALONG WITH BILLS AND VOUCHERS IN RESPECT OF 9 9 SUNDRY CREDITORS AND IN CASE OF REMAINING 14 CREDITORS THE DETAILS OF PAYME NTS MADE HAVE BEEN GIVEN. HENCE CONSIDERING THE FACTS AND CIRCUMSTAN CES OF THE CASE THE LD. CIT(A) HELD THAT AS THE ASSESSEE HAS ADMITTED HIS L IABILITY TOWARDS SUNDRY CREDITORS AND WHEN THE IDENTITY OF THE CREDITORS WA S ALSO ESTABLISHED THE ASSESSEE HAS ALSO EXPLAINED THE NATURE OF THE CRED ITS WHICH WAS TOWARDS PURCHASES MADE BY THE ASSESSEE FROM THESE PARTIES A ND NECESSARY DETAILS LIKE BILLS AND VOUCHERS WERE ALSO FURNISHED AND HEN CE UNDER THESE FACTS AND CIRCUMSTANCES OF THE CASE THERE WAS NO CESSATI ON OF LIABILITY. HE ACCORDINGLY DELETED THE ADDITIONS SO MADE BY THE AO U/S 41(1) OF THE ACT. 5. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND IN V IEW OF THE WELL REASONS AND DETAILED ORDER OF THE LD. CIT(A) WE DO NOT FIND ANY MERIT IN THE APPEAL OF THE REVENUE AND THE SAME IS ACCORDING LY DISMISSED. ITA NO.2374/MUM/2013 6 6. IN THE RESULT THE APPEAL OF THE REVENUE IS DISM ISSED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 28 TH SEPT 2016 . 28 SEPT 2016 SD/ SD/ SD/ SD/- -- - SD/ SD/ SD/ SD/- -- - ( (( (ASHWANI TANEJA ASHWANI TANEJA ASHWANI TANEJA ASHWANI TANEJA) ) ) ) ( (( (SANJAY GARG SANJAY GARG SANJAY GARG SANJAY GARG) ) ) ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI: 28 SEPT 2016 .../ SRL SR. PS / COPY OF THE ORDER FORWARDED TO COPY OF THE ORDER FORWARDED TO COPY OF THE ORDER FORWARDED TO COPY OF THE ORDER FORWARDED TO : :: : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. () / THE CIT(A)- CONCERNED 4. / CIT CONCERNED 5. ! / DR ITAT MUMBAI CONCERNED 6. '# / GUARD FILE. / // / BY ORDER (ASSTT. REGISTRAR) /ITAT MUMBAI